Forex Signal (Thu July 7 2011, 10:00am NY Time EST) – CA IVEY PMI

The Canada IVEY PMI will be released today. This release is considered a leading indicator that receives much attention from traders; especially when its released early in the week before the Employment report. Here’s the forecast:

10:00am (NY Time) CA IVEY PMI Forecast 65.7 Previous 69.1
ACTION: USD/CAD BUY 62.0 / SELL 69.0

The Trade Plan
Our tradable deviation factor is 3.0. IVEY PMI is usually tradable when its released before the Canadian Employment Change report. The IVEY PMI is a leading indicator used to predict future trends. The Employment Change is a lagging indicator which means its used to confirm if a trend is or isnt developing. Therefore, The IVEY PMI report should indicate in which direction the employment report will go.

We’ll look to BUY USDCAD if we get 62.0 or less. We’ll look to SELL USDCAD if we get 69.0 or better. I’ll be using Retracement Trading method. To find out more about my trading system, read:
Henry Liu’s Trading Method

The Market
The IVEY PMI is forecasted to grow for the month of June at an increased rating of 65+. However, with recent unexpected rate hikes from China, Global Manufacturing slowdown, and the drop in crude prices, Canadian economy could face further pressure… As BOC Carney recently commented: “One thing that bears stressing is that in an environment of substantial headwinds โ€” from U.S. growth, from the exchange rate, two examples โ€” in such an environment, monetary policy may still need to be stimulative in order to close the output gap and in order to get inflation back to target…”

Additional Thoughts
USDCAD may not retrace much after a strong release. The retracement may also take place in the first 5 minutes so once we see a significant retracement, get ready to jump in.

Pre-news Considerations
No Pre-news trade for this release.

DEFINITION
The Ivey Purchasing Manager’s Index (PMI) measures the activity level of purchasing managers from all sectors of the economy, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation’s currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

Historical Chart and Data for CA IVEY PMI

Thanks,

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